Cause For Concern

All I can tell you is, if you sell your work to a publisher, you'll get a 1099 form listing the money you were paid, and a copy goes to the IRS, so the feds will definitely know.

Don't know a thing about RSSI...

It is my understanding that one time gifts and profit from intellectual properties, life insurance and such will not effect social security. But if your earnings and gifts and such show a pattern then it will be considered income. Still, you are permitted to make a certain amount per year. My limit is equal to my SSI but I don't know if it would be the same equation for others.

Call a SSI office and ask. Chances are if you make anything, it won't be enough to matter. At least not the first year. Relax. That bridge is way off in the distance. Concentrate on writing. There will be time enough to deal with SSI after you sign a contract.

Way way out of my league, but Callahan, the brilliant quadraplegic cartoonist, has had many nasty words to say about how he has been jerked around by the powers that be so that, no matter what he does, the US govt scoops up whatever additional income he manages to generate. His autobiography, Don't Worry, He Won't Get Far on Foot, makes me thing that your concerns may be valid.

David I said:

Way way out of my league, but Callahan, the brilliant quadraplegic cartoonist, has had many nasty words to say about how he has been jerked around by the powers that be so that, no matter what he does, the US govt scoops up whatever additional income he manages to generate. His autobiography, Don't Worry, He Won't Get Far on Foot, makes me thing that your concerns may be valid.

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(that was such a cool book, in an outraging sort of way)

Definitely call up the Social Security office and ask. Be very specific and get a very straight answer out of them. Even IRS tax-time isn't as loopy and weird as Social Security. Make sure you get it nailed down.

And even then, it may not help.

Here's a link to the FAQ at the social security website:

http://ssa-custhelp.ssa.gov/cgi-bin...y5zZWFyY2hfbmwmcF9wYWdlPTE*&p_li=&p_topview=1

Basically, it says that if you work, it'll deduct a certain amount from your SSI payments. It doesn't specifically define "work," but I suspect it would include income generated by writing a book.

JD

I believe the maximum income before deductions start (for my mom, at least, who began claiming this year at 60) is 12k/year.

On the other hand, most first-novel advances are in the 5-10k range, so this shouldn't be a problem at first...

Ah but they count the SSI as income too so if you got a $10K advance it very well could be a problem. A $5K advance on the other hand might end up still owing some taxes, but hopefully not too many.

Don't call SSI. Each person you talk to will give you a different answer, as will the IRS.

The government's first rule is 'Income From All Sources'.
(Sorry I don't have my books here today)

Spend time with a tax professional. Better yet, call the Head of the School of Accounting at your local community college and ask her/him.

I would suggest that you not worry about it until you get the advance in your hands. At that point set aside 1/3 of it in an interest bearing savings account..(i/e don't spend it) and take everything to a tax professional at the end of the year.

Thereafter use that wonderful tax program by Intuit that interacts with that other 'bookeeping' program they have.

It does get complex. Trust me. Now since you don't have representation yet and have not sold your novel it's really a moot point. BUT
Depending on the state you live in you may have to pay general excise tax and income tax on those earnings (here in Hawaii I have had to be a sole proprietor).
You WILL have to pay income tax and be a sole proprietor (or create an LLC) for this income. You will also have to pay self employment tax (I know it sounds stupid).
Because things work SO SLOWLY in publishing you will have PLENTY of time to figure out what to do. Don't worry about it now - just write the BEST books you can and try to get represented.
Deal with this AFTER your book sells and you know exactly how much money you are dealing with.

My book sold in December of 2006 so I had discussions with a CPA and attny who had experience with intellectual property in my state -- In JANUARY 2007. (This was NOT to go over contracts -- William Morris Agency did all that-- this was to determine exactly what I should do to make the tax bite less and to follow all the rules). When it is a significant sum you really have to get advice from experts in your state.
I had plenty of time to organize my financial affairs. I didn't get the first check until April 2007.
PLUS.
Even with contracts it's impossible to figure out exactly how much you will receive in any given year. For example even though my foreign rights sold many months ago there are some countries that take over a year to pay out.
So like I say. Write the books. Get represented. Get your books sold. And THEN worry about what to do with the money.

I understood her concern to be the possibility of a loss of Social Security benefits. Still, either way, there is nothing to worry about until you actually collect some money.

Intellectual property has NO VALUE until it is sold. Write as many books as you want. Worry about taxes and SSI penalties when you cash that first check.

I think that you should be as aggressive as possible. First, as others have suggested, get all of the information you can - but do your best to remain anonymous while doing so. No need to tip either the SS folks or the IRS off needlessly.

Second, see an attorney. One that specializes in both SS and estate planning would be best. See if there is any way to arrange your affairs (maybe by setting up some sort of trust?) that would keep any book earnings from being counted as income and deducted from your benefits. I highly recommend doing this while any writing income is still in the theoretical phase.

I'm NOT recommending doing anything illegal, but just pointing out that being crafty is not against the law and you have the right to use all existing laws to your benefit.

Wait, the original question had to do with Supplemental Security Income. That's different from the Social Security that people get as retirement, and is intended for people who have never worked and are disabled. (And is different from Social Security Disability Income, which is for folks who have worked a certain amount and then become disabled.)

SSI has an offset (and may have a cut-off, whereby one is removed from SSI entirely, but I don't know the details of that) for income. So, if you're receiving a set amount per month in SSI, and then earn some money, the monthly payments will be decreased, based upon a formula. I only read the FAQ cited above quickly, but IIRC it's something like a 2-for-1 deal, so that for every $2 you earn, the SSI check is reduced by $1.

Again, the link above has the basics, and for the details, it makes sense to wait until you've got a contract in hand, because even then it'll be some time before you actually receive the (advance) check from the publisher, and then you'll have specific numbers to ask the Social Security Administration about. Until then, the questions you have would be too vague.

It's always a good idea to find an accountant or lawyer you can work with, someone who knows the basics of tax planning, and he/she could answer your basic questions, and you'll have established a relationship with him/her for when you need a quick response later.

JD, not giving individual legal advice, just general information.

I'm currently on SSI. I get monthly checks from he government.

I know I can't keep more than $2,000 in the bank. If it goes over, I have to pay back the money. Everytime I have to go to the Social Security office for something, they usually ask for the three most recent bank statements, so they do check. But that isn't to say you can't do other things with the money that isn't in the bank...

Alana Mortensen said:

I know all about SSI. I did receive it since I was 18 but my question and concern is about benefits of the disabled dependant of someone who is on SS. This they call RSSI. I was switched over to it last year b/c both my parents are on SS. What are the rules and stiipulations concerning income? Will benefits decrease if and when I do get published?

Forget SSI! The govt sucks....... all too true.

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Usually the only way a dependants ssi is affected is if it is one of your children(my son is on ssi), parents even though live with you on ssi are not your children so your income will not affect their ssi. Now if your still on ssi it will affect it to a degree, but unless your making the cash on a weekly basis, you will only be hit for a month or two(unless you hit it too big).

ORION said:

Depending on the state you live in you may have to pay general excise tax and income tax on those earnings (here in Hawaii I have had to be a sole proprietor).

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This is a little off-thread, but don't get me started on taxes in Hawaii. I lived there for 13 years, working mostly as a consultant. Hawaii wanted general excise on money that I earned working outside the State of Hawaii. I'd go to, say, Indonesia on a two-week job, and Hawaii would want their cut, even though the work was entirely in another country..even though the law specificaaly states that GE taxes are due only on economic activities inside the state...

There. I feel better now.

Alana Mortensen said:

Forget SSI! The govt sucks....... all too true.

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You have no idea just how hard the gov sucks....and I would know...I worked for the gov for years...until I couldn't take it any more. I saw them do illegal things to cover their own ass...yep, sure did.

I worked in IT so I can't help you, but I agree that you should find out as much as possible and not give your name in the process.